22 Jan WHAT RISK DOES A SON HAVE FOR ABUSING MOM’S POWER OF ATTORNEY? Never take advantage of person who does the most for you!
A financial durable power of attorney gives an agent authority to make financial decisions on behalf of the principal (the one giving the authority). However, sometimes the agent exceeds the authority granted by the principal. The repercussion may be greater than the agent may realize.
Facts:
Son, acting as agent for elderly mom under her financial durable power of attorney, sells mom’s home for $200,000 as mom has dementia. Most financial durable powers of attorney grant the agent the authority to sell real estate. However, son then transfers the $200,000 into an account in his individual name under the premise that mom would have gifted him the funds. Mom’s financial durable power of attorney limited gifting to the agent to no more than $10,000 in a year. Agent’s siblings have requested he return mom’s funds to mom or pay for her care (she is now in a facility), but he has not done so yet.
Consequences:
- Breach of Fiduciary duty
The agent can be sued by the principal (mom) or the family for his failure to act in good faith. - Restitution
If there is a judgement against the son, the court will likely require restitution. - Punitive damages
The court could require the agent to pay more than the funds taken if the court deems the agent’s misconduct was severe. - Removal
The court would likely remove the agent from acting if the agent breaches his fiduciary duty. - Criminal charges
Son (agent) could be found guilty of theft. The level of penalty (misdemeanor or felony) increases with the amount taken or stolen. Since mom was in a vulnerable state, the agent (son) could not only be charged with theft, but he could also be charged with fraud or exploitation as a result of his elder abuse. Under Texas law, the theft of $200,000 would be considered a second-degree felony. Punishment could be 2 to 20 years in jail. An offense against the elderly is an aggravating circumstance. - If convicted of felony, son cannot serve as executor
A person convicted of a felony (especially in a case like this), the son (agent) could not be the executor of a will offered for probate in Texas. - Medicaid ineligibility
If the transfer was made within 5 years, there could be ineligibility for long-term care Medicaid which could help pay for long-term care. However, if a police report is filed against the agent, then Medicaid eligibility is not likely to be lost as a result of son’s criminal act. - Estate litigation if son (agent) dies without return of funds
There could be a suit or claim by mom or the siblings of the agent if he fails to return funds to mom prior to his death. - Action against agent by agent’s creditors
Since the funds are now owned by the son (agent), if he had creditors, then the funds he took might be subject to the claims of his creditors. - If agent becomes disabled and he has no power of attorney, funds could be subject to guardianship
If son becomes mentally disabled or incompetent and he has no power of attorney, then guardianship may be needed over the son since he deposited the funds in an account that is solely in his name.
In the event of elder abuse, in Dallas County, a good resource is the Senior Source’s Elder Financial Safety Center. Similarly, Tarrant County has the Financial Exploitation Prevention Center of Tarrant County. Both are hubs for connecting with the district attorney’s office, probate courts, etc. One can also call Adult Protective Service, local law enforcement, the Attorney General’s Office, etc. Of course, the son must face the truth that his mom didn’t make a gift or he will face the consequences.
If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.